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IBEW Local 1547 v. Lindgren (8/13/99) sp-5159
Notice: This opinion is subject to correction before publication in
the Pacific Reporter. Readers are requested to bring errors to the attention of
the Clerk of the Appellate Courts, 303 K Street, Anchorage, Alaska 99501, phone
(907) 264-0608, fax (907) 264-0878.
THE SUPREME COURT OF THE STATE OF ALASKA
INTERNATIONAL BROTHERHOOD OF )
ELECTRICAL WORKERS LOCAL ) Supreme Court Nos. S-7424/7444
UNION 1547, )
) Superior Court No.
Appellant and ) 4FA-93-2602 CI
v. ) O P I N I O N
CLAY E. LINDGREN and CRAIG )
F. VAN AMBURG, )
Appellees and ) [No. 5159 - August 13, 1999]
Appeal from the Superior Court of the State of
Alaska, Fourth Judicial District, Fairbanks,
Ralph R. Beistline, Judge.
Appearances: William F. Morse, Associate
General Counsel, IBEW Local Union 1547, and Helene Antel Brooks,
Anchorage, for Appellant and Cross-Appellee IBEW Local Union 1547.
James M. Hackett, Law Offices of James M. Hackett, Inc., Fairbanks,
for Appellees and Cross-Appellants Lindgren and Van Amburg.
Before: Compton, Chief Justice, Rabinowitz,
Matthews, Eastaugh, and Fabe, Justices.
Both parties to this appeal challenge aspects of the
superior court's award of damages against a union for a breach of
its duty of fair representation.
II. FACTS AND PROCEEDINGS
Clay E. Lindgren and Craig F. Van Amburg were employed by
the Fairbanks Municipal Utilities System (FMUS), an agency of the
City of Fairbanks, in a bargaining unit represented by the
International Brotherhood of Electrical Workers Local 1547 (IBEW).
FMUS laid off Lindgren and Van Amburg effective January 10, 1992.
Lindgren and Van Amburg initially filed separate lawsuits
against the City of Fairbanks and against certain FMUS supervisors
(collectively the City) challenging their layoffs. Lindgren's
complaint contained numerous legal theories, including loss of a
protected merit position, loss of contractual rehire rights,
violation of the Alaska Whistleblower Act, [Fn. 1] and denial of a
meaningful hearing in violation of 42 U.S.C. sec. 1983. Lindgren
sought compensatory and punitive damages, reinstatement, interest,
and attorney's fees. Van Amburg's complaint was similar except
that it contained no Whistleblower statute allegations.
Some months later, Lindgren and Van Amburg filed another
lawsuit in which the City, the Deputy City Manager-Utilities, [Fn.
2] IBEW, and the union's business agent Pete Blair (collectively
the IBEW) were defendants. The complaint in this action accused
the defendants of conspiring to deprive the plaintiffs of their
rights and alleged that IBEW had breached its duty of fair
representation to the plaintiffs "by failing to protect plaintiffs'
constitutionally protected property interests because of hostility
or animus, and/or because of a lack of complete good faith and
honesty and/or because of arbitrary conduct on the part of the
In June 1994 Lindgren and Van Amburg settled their
lawsuits against the City. Van Amburg received the principal sum
of $35,000 and attorney's fees of $5,300 under Civil Rule 82.
Lindgren received the principal sum of $155,000 plus Rule 82
attorney's fees of $13,800 and costs of $3,718.90. Van Amburg was
reinstated, but Lindgren was not. Lindgren's settlement agreement
recited that, if he returned to work at FMUS, he might "be
subjected to hostility and animosity in the workplace by union
members, given his pending lawsuit against the union." Finally,
the City made pension contributions on behalf of each plaintiff for
the period of January 13, 1992, to June 1, 1994.
But these settlements did not end the litigation, for the
plaintiffs' claims against IBEW remained. Following a pretrial
conference held shortly before the scheduled trial, the superior
court issued an order directing the course of future proceedings.
A jury trial on the question of IBEW's liability was ordered. With
respect to damages, the plaintiffs' claims were limited to costs
and attorney's fees incurred in privately prosecuting their claims
against the City. The order noted that the attorney's fees were
incurred under contingent fee agreements, and that these agreements
provided "a reasonable basis upon which to determine damages in
this case." The court therefore "conclude[d], as a matter of law,
that the appropriate measure of Plaintiffs' damages for attorney
fees [was] the monies spent under the terms of their contingency
fee agreement[s]." The court also allowed IBEW to offset that
portion of each settlement which represented Civil Rule 82
attorney's fees, less the contingent fee percentage applied to the
Rule 82 fees:
Defendant, therefore, is entitled to offset
two-thirds of the attorney fees paid by the City. In other words,
Plaintiff Lindgren received $9,200 for attorney fees from the City
which should be offset from his claim here. Plaintiff Van Amburg
received $3,533 from the City in attorney fees that should be
offset from his claim here.
IBEW argued that the Lindgren settlement represented in
part punitive damages and damages under the Whistleblower statute
that it either could not have sought or had no duty to seek in
discharging its representational obligations. Therefore, IBEW
argued that it should not be liable for attorney's fees spent to
pursue these remedies. In response, the court ruled as follows:
While the Court understands Defendant's
arguments for apportionment of damages based on the Whistleblower
statute and the concern for punitive damages, it is clear that the
claim for wrongful discharge and breach of contract were
substantial factors in the settlement of Plaintiffs' claims against
the City. The settlement amounts themselves were calculated by
looking at the lost wages Plaintiffs incurred and then providing
reinstatement in Van Amburg's case and buying out reinstatement
rights in Lindgren's case. Both of these remedies are available
within the terms of the collective bargaining agreement. Hence,
substantively the Court concludes that apportionment of damages
among legal theories is not appropriate here. Practically,
apportionment of damages among legal theories would be extremely
difficult and highly speculative. Procedurally, the request for
apportionment of damages is an affirmative defense that should have
been pled, addressed in motion practice, and resolved far earlier
than at trial. For all these reasons, Defendant's request that
damages be apportioned among legal theories is hereby DENIED.
The court also explained the context of its order:
The Court is concerned about the status
of this matter at this very late stage of the proceedings. A
number of critical issues were not addressed during motion
practice. The proposed jury instructions are lacking, especially
as to damages. Furthermore, the parties are submitting major legal
issues to the Court in the form of proposed jury instructions.
[Counsel for IBEW] has commented that the Court is going to have a
difficult job in crafting jury instructions that guide the jury
through the difficult damages issues. [Plaintiffs' attorney] has
indicated that the Court will have its work cut out for it in
preparing appropriate damage instructions. Jury instructions,
however, were to be submitted by the parties that were consistent
with the parties' respective theories of the case.
It appears to the Court that while the
parties are prepared to proceed to trial on the liability issues,
they are not prepared to proceed on the issue of damages.
Therefore, bifurcation of the two issues would be appropriate.
However, for the reasons set forth below, the Court concludes that
the Court can resolve the damages issue summarily while allowing
the parties to proceed to trial on liability.
Trial by jury was held on the liability issues. The jury
concluded that IBEW had breached its duty of fair representation
and that Lindgren and Van Amburg had incurred attorney's fees that
they otherwise would not have incurred as a result of IBEW's breach
of duty. [Fn. 3] The trial court then entered judgment in
accordance with the pretrial order. Specifically, Lindgren was
awarded the principal sum of $47,066.67 plus interest, costs, and
attorney's fees, and Van Amburg was awarded the principal sum of
$9,933 plus interest, costs, and attorney's fees.
IBEW appeals, raising numerous arguments. Briefly sum-
marized, these arguments fall within three categories. First, IBEW
argues the superior erred in awarding as damages for its breach of
its duty of fair representation the attorney's fees incurred by the
plaintiffs in prosecuting their cases against the City. Second, it
contends the superior court should have held a hearing concerning
the composition of the settlements to ensure that they did not
include elements of damage that were not ascribable to IBEW's
breach. Third, it argues the superior court erred in excluding
certain evidence during the jury trial. For the reasons that
follow, we reject the first and third arguments, but find merit in
the second as to the settlement with Lindgren.
Lindgren and Van Amburg cross-appeal, arguing that the
superior court's award of attorney's fees was insufficient.
Lindgren also argues that the superior court erred by ruling that
his damages were limited to costs and attorney's fees incurred in
suing the City. For the reasons that follow, we reject the former
argument but find merit in the latter.
A. The Superior Court Did Not Err by Awarding as Damages for
Breach of IBEW's Duty of Fair Representation Attorney's Fees and
Costs Incurred in Prosecuting the Case Against the City.
IBEW asserts that the superior court erred in imposing
joint and several liability. It contends that courts should
apportion, between an employer and a union, damages caused by the
employer's breach of the collective bargaining agreement and the
union's inadequate representation of employees.
Contrary to IBEW's assertion, the superior court did not
impose joint and several liability on IBEW. Instead, the court
concluded that the amount of attorney's fees that the plaintiffs
incurred in pursuing their claims against the City was a fair
measure of the uncompensated damages that IBEW had caused by
breaching its duty of fair representation.
IBEW argues that some method of apportionment of damages
between the employer and IBEW should have been utilized, but it
does not specify the appropriate method of apportionment. Further,
IBEW does not distinguish between (1) damages that might have been
jointly caused by the wrongful conduct of the City and IBEW and (2)
damages that were solely caused by the wrongful conduct of one of
them. Instead, IBEW generally refers to a number of federal cases,
which, in turn, are not especially directive as to how damages
should be allocated between employers and labor unions where there
is both a breach of contract and a breach of the union's duty of
fair representation. [Fn. 4]
IBEW relies extensively on Aguinaga v. United Food &
Commercial Workers International Union, [Fn. 5] a case that
reflects federal law in this area. The Aguinaga court stated:
In hybrid sec. 301 cases, "[t]he governing
principle is to apportion liability between the employer and the
union according to the damage caused by the fault of each." Vaca
v. Sipes, 386 U.S. 171, 197, 87 S.Ct. 903, 920, 17 L.Ed.2d 842
(1966). "[D]amages attributable solely to the employer's breach of
contract should not be charged to the union, but increases if any
in those damages caused by the union's refusal to process the
grievance should not be charged to the employer." Id. at 197-98,
87 S.Ct. at 920-21. The general rule that damages are to be
apportioned between the employer and the union may not apply in
situations where a union affirmatively caused the employer to
commit the contract breach, or where the union and the employer
actively participated in the other's breach. Id. at 197 n.18, 87
S.Ct. at 920 n. 18; see also Bennett v. Local Union No. 66, 958
F.2d 1429, 1440 (7th Cir. 1992). Rather, these situations may
warrant the imposition of joint and several liability.[ [Fn. 6]]
Federal courts have upheld at least two methods of fault
apportionment. In Bowen v. United States Postal Service, [Fn. 7]
the Supreme Court let stand an award of damages in a case where the
trial court instructed the jury that it could attribute damages to
the union based on the date of a hypothetical arbitration decision
-- the date when the employer would have reinstated the employee if
the union had fulfilled its duty of fair representation. [Fn. 8]
The employer was held liable for damages before that date, and the
union was liable for damages after that date. In Aguinaga, the
Tenth Circuit upheld a district court's disposition of a hybrid
case in which the trial court (1) calculated the total amount of
damages caused in common by defendants, and (2) assessed shares of
the total damages using a percentage of fault method.
Specifically, the trial court apportioned twenty-five percent of
the damages to the union and seventy-five percent of the damages to
the employer. [Fn. 9]
Federal law does not control this case, however, because
the National Labor Relations Act excludes employers that are
political subdivisions of a state. [Fn. 10] Further, federal law
contains a unique feature unreplicated in state law that may, as a
practical matter, lead to different methods of allocating damages.
As we noted in Kollodge v. State:
[F]ederal and Alaska law differ on the
consequences which follow from a union's refusal to represent an
employee. Under federal law the employee may not proceed directly
against the employer without first proving a breach of the union's
duty of fair representation. [Vaca v. Sipes, 386 U.S. 171, 191
(1967).] Alaska law places no such impediment on an employee's
right to obtain direct review of the employer's decision to
terminate the employee. Casey v. City of Fairbanks, 670 P.2d 1133,
1138 (Alaska 1983). The employee may obtain review in superior
court or process his [grievance] through arbitration if permitted
by the contract or regulations. Id. at 1138-39. This right of
direct review would seem to make the action for breach of the duty
of fair representation of less critical importance in state law
than in federal law.[ [Fn. 11]]
Since, under federal law, an employer cannot be liable in a direct
action by the employee unless the employee proves that the union
has breached its duty of fair representation, damages against the
employer and the union are often determined together in a single
proceeding. [Fn. 12] The need for some method of allocating
damages is thus presented.
In this case, by contrast, IBEW was the only defendant.
Lindgren and Van Amberg had previously settled their claims against
the City. All that may be needed to fully compensate the employees
here is to award them the costs and attorney's fees they incurred
in bringing suit against the City. Because IBEW breached its duty
of fair representation, these expenses are logically recoverable as
damages for that breach without deciding whether to adopt any
particular allocation formula. It is therefore presently
unnecessary to decide whether the federal model(s) of apportionment
should generally be followed as a matter of state law in cases
where damages include more than the reimbursement of an employee's
costs and attorney's fees.
IBEW next argues that, if it is to be assessed attorney's
fees, the value of those fees should not be determined by the
mechanical use of a contingency fee.
Despite the rule applicable in federal litigation that
attorney's fees are not ordinarily recoverable by the prevailing
party, [Fn. 13] federal courts have frequently permitted litigants
to recover from a union that has breached its duty of fair
representation attorney's fees that the litigant reasonably
incurred in pursuing a claim against the employer. [Fn. 14] IBEW
does not contend that Alaska law should differ from federal law on
this point, but argues that the award of attorney's fees should not
be based on a contingent fee contract.
IBEW argues that a "lodestar"computation -- time spent
multiplied by a reasonable hourly rate -- should have been used.
IBEW cites several cases suggesting that federal courts apply the
lodestar method of calculation in cases where attorney's fees are
statutorily authorized as an award to the successful litigant.
These cases are inapplicable, however, as they deal with attorney's
fees incurred in prosecuting a defendant. In contrast, the
attorney's fees awarded in this case are an element of damages
incurred in prosecuting not the defendant, but a third party that
the defendant was contractually obligated to prosecute. [Fn. 15]
Further, calculating damages by using the lodestar method when the
attorney's fees were incurred under a contingent fee contract will
only randomly and occasionally achieve the goal of making the
employee whole. Where there is a contingent fee contract, awarding
the fee actually incurred will achieve the desired goal.
IBEW also argues that the "make whole remedial goal"of
a claim against a union for breach of the union's duty of fair
representation militates against a rule of "automatically awarding
as damages the attorney fees [an employee] owed his counsel
according to a contingency fee arrangement." We agree that a court
should not automatically award the amount that an employee must pay
as a contingent fee. Instead, contingent fees must pass the test
of reasonableness. If they are found reasonable, they may be
awarded. Here, the superior court made such a finding.
In summary, the trial court found that the plaintiffs had
been made whole by the settlement they received from the City,
except to the extent that they were required to pay for the
representation IBEW should have furnished as part of its
responsibilities. The trial court thus awarded these payments as
damages. This was a logical and straightforward method, well
designed to afford full compensation to the plaintiffs. Further,
the fact that the damages were based on the contingent fees
incurred by the plaintiffs does not taint the damage award, since
the contingent fee contracts were found reasonable. We therefore
approve in principle the award as damages of attorney's fees and
costs incurred by the plaintiffs in proceeding against the City.
B. A Remand of the Judgment in Favor of Lindgren is
Necessary to Ensure that His Settlement with the City Did Not
Include Elements of Damage that Could Not Be Attributed to IBEW's
The union argues that some portion of the settlements
represent damages for plaintiffs' statutory claims that the union
could not have prosecuted on the plaintiffs' behalf. The pretrial
order stated that the whole amount of the settlements was
sufficiently related to the claims that should have been brought
under the collective bargaining agreement so that no breakdown of
the settlement elements is necessary. IBEW effectively refutes
this aspect of the order only with respect to punitive damages
under the Alaska Whistleblower Act. Since Van Amburg had no claim
under the act, this point only applies to Lindgren's settlement.
An affidavit of the City's attorney suggests that the
possibility of a punitive award played an important role in the
City's decision to settle. Since punitive damages would not have
been available under the collective bargaining agreement, IBEW in
full performance of its representational obligations could not have
obtained such damages for Lindgren. Therefore, it would not be
just to charge IBEW with attorney's fees insofar as those
attorney's fees are allocable to punitive damages. For this
reason, a remand is necessary to enable the court to conduct an
evidentiary hearing and determine what portion, if any, of
Lindgren's settlement represents punitive damages.
IBEW also argues that the award overcompensated the
employees because the superior court declined to consider (1) that
"[a]fter their layoff, FMUS offered plaintiffs employment in
positions other than in engineering,"and (2) that Lindgren had
interim earnings that the court should have deducted from his
damage award. The first point lacks merit because the employees
were not required to accept "positions other than in engineering"
to mitigate their damages. [Fn. 16]
IBEW's second point is more persuasive: that Lindgren
worked during his layoff and that credit should have been given in
his settlement for the amounts that he earned. The argument is,
essentially, that the settlement was unreasonably high and
therefore exceeds that which can fairly be charged to the union.
We agree that IBEW should be permitted to present
evidence on this point and that a remand is necessary for this
purpose. After considering the evidence, the superior court should
determine whether the amount received by Lindgren in the settlement
with the City was excessive in that it fell outside the range of
awards that could be reasonably expected had the union fulfilled
its duty of fair representation. If excessiveness is found,
attorney's fees to the extent of the excessiveness should not be
awarded as damages.
IBEW also argues that the award of contingent fees
overcharged the union because the fees were inflated by compensa-
tion for earnings for Lindgren calculated after the time of the
settlement. IBEW phrases this argument as follows: "If a contin-
gency fee can be the basis for a union's damages the settlement to
which the fee equation is applied may not include the value of
front pay the employee accepted after declining reinstatement."
IBEW argues that it could not have obtained damages for lost income
for Lindgren after he was offered and declined reinstatement.
We agree that a remand is necessary on this point. This
issue is a mixed question of law and fact. On remand the court
should invite briefs on the legal question as to whether lost
income after reinstatement was offered and declined would have been
a remedy available to Lindgren under the collective bargaining
agreement. If such a remedy was available, the court should
determine whether this aspect of the settlement was excessive. If
such a remedy was not available, the court should determine what
portion of the settlement represents such lost income and reduce
the damage award by the amount of fees allocable to it.
C. The Superior Court Did Not Err in Its Evidentiary Rulings
During the Jury Trial.
We next consider IBEW's argument that the superior court
"erred in prohibiting the IBEW from presenting evidence that
Lindgren accused FMUS of fraud and cover-up to gain Whistleblower
protection from an anticipated layoff, . . . [thereby denying] the
IBEW a fair trial on the issues of liability and causation." IBEW
argues that we should therefore order a new trial.
This argument lacks merit. The evidence IBEW sought to
present to the jury -- which IBEW claims would establish that
Lindgren would have pursued Whistleblower litigation regardless of
the Union's breach of its duty of fair representation -- would have
been of no probative value as to whether IBEW breached its duty of
fair representation and whether that breach caused at least some
IBEW also argues that the superior court erred by "not
permitting the IBEW to present to the jury the terms of the
settlement with the City." IBEW claims that the evidence it sought
to present would have enabled the jury to conclude that "the
attorney fees incurred by plaintiffs were attributable not wholly
to the union's breach, but in part to the pursuit of parallel but
distinct claims." This evidence also relates to the amount of
damages and was irrelevant to the issues that were presented to the
D. The Cross-Appeal
As cross-appellants, Lindgren and Van Amburg make two
arguments. First, both Lindgren and Van Amburg claim that the
superior court's award of attorney's fees was inadequate. The
argument is so confusingly presented that we are unable to
understand it. Nevertheless, we have reviewed the superior court's
award of attorney's fees and conclude that the only error committed
was a $32.67 transposition error that favored Van Amburg. [Fn. 17]
Second, Lindgren argues that the superior court's award
failed to make him whole because the court did not order IBEW to
compensate him for future damages. We agree that a remand is
necessary on this point. In its pre-trial order, the superior
court stated that the City "[bought] out reinstatement rights in
Lindgren's case"and that except "for costs and attorney fees"
Lindgren was "made whole by [his] settlement with the City." The
superior court lacked a sufficient basis for this conclusion. The
pre-trial order was not entered in response to a motion for summary
judgment or following an evidentiary hearing. Further, as men-
tioned above, the court never determined as a matter of fact or law
whether Lindgren was entitled to an award of future damages.
Accordingly, the superior court's conclusion that, except for costs
and attorney's fees, Lindgren was "made whole by his settlement
with the City"must be vacated. Whether Lindgren's settlement was
fully compensatory must be litigated on remand.
The judgment of the superior court is AFFIRMED as to Van
Amburg and VACATED as to Lindgren. Lindgren's case is REMANDED for
further proceedings consistent with this opinion.
His title has since changed to Special Projects Coordinator.
These conclusions were expressed as answers to questions posed
in a special verdict form.
Such cases, in federal jurisprudence, are referred to as
"hybrid"cases. See Aguinaga v. United Food & Commercial Workers
Int'l Union, 993 F.2d 1463, 1469 n.1 (10th Cir. 1993). This is
because an employee may not proceed directly against an employer
without alleging and proving that the employee's union has breached
its duty to fairly represent the employee. See Vaca v. Sipes, 386
U.S. 171, 186 (1967).
993 F.2d 1463 (10th Cir. 1993).
Id. at 1474.
459 U.S. 212 (1983).
The Court did not approve nor disapprove such a method because
the union had not objected to the jury instructions based upon the
manner of apportionment. See id. at 230 n.19.
Aguinaga, 933 U.S. at 1469.
See 29 U.S.C. sec. 152(2) (1994).
757 P.2d 1028, 1034 (Alaska 1988).
See, e.g., Bowen v. United States Postal Serv., 459 U.S. 212
(1983); Aguinaga v. United Food & Commercial Workers Int'l Union,
993 F.2d 1463 (10th Cir. 1993); Bennett v. Local Union No. 66, 958
F.2d 1429 (7th Cir. 1992); Ames v. Westinghouse Elec. Corp., 864
F.2d 289 (3rd Cir. 1988) Dutrisac v. Caterpillar Tractor Co., 749
F.2d 1270 (9th Cir. 1983).
See Alyeska Pipeline Service Co. v. Wilderness Society, 421
U.S. 240 (1975).
See, e.g., Bennett v. Local Union No. 66, 958 F.2d 1429, 1440
(7th Cir. 1992) (stating that attorney fees in breach of duty of
representation cases are not awarded as a penalty "but rather as
proximate consequential damages for the union's failure to provide
representation: the expense that [the employee] has incurred in
pursing her contractual grievance against the Company 'is not
merely a result of the harm that [the Union] did; it is the harm
itself.'"); Cruz v. Local Union No. 3 of the Int'l Bhd. of Elec.
Workers, 34 F.3d 1148 (2nd Cir. 1994); Ames v. Westinghouse Elec.
Corp., 864 F.2d 289, 293 (3d Cir. 1988); Dutrisac v. Caterpillar
Tractor Co., 749 F.2d 1270, 1275-76 (9th Cir. 1983); Self v.
Drivers, Chauffeurs, Warehouseman & Helpers Local Union No. 61, 620
F.2d 439, 444 (4th Cir. 1980).
See Scott v. Local Union 377, Int'l Bhd. of Teamsters,
Chauffeurs, Warehousemen & Helpers of America, 548 F.2d 1244, 1246
(6th Cir. 1977). The court there stated:
A different situation is presented, however,
in [an] action against the Union, for in that action the principal
element of Scott's damages is the amount which it cost him in
attorney fees and other expenses to do that which the union was
obliged but failed to do on his behalf. He was, therefore,
entitled to include in his damages against the Union the amount
which he reasonably expended in attorney fees and other costs in
prosecuting his claim against the company, costs which he would not
have incurred but for the Union's breach.
See, e.g., N.L.R.B. v. Laredo Packing Co., 730 F.2d 405, 407-
08 (5th Cir. 1984) ("A claimant's failure . . . to accept
substantially equivalent employment . . . without good cause
constitute[s] [a failure to mitigate]." The court held that truck
drivers who refused an offer of nondriving employment that was
"significantly dissimilar to truck driving"could not be charged
with a failure to properly mitigate.).
Based on the assumption that the superior court's award of
attorney's fees was insufficient and that he is entitled to receive
additional attorney's fees, Van Amburg argues that the superior
court applied the wrong pre-judgment interest rate. Our conclusion
that the cross-appellants are not entitled to a greater award than
they actually received disposes of this argument.